[LETTERHEAD OF GOLDMAN & GITTELMAN, P.C.]

January 26, 1998

Dr. Atul Mehta, CEO
Elite Pharmaceuticals, Inc. and Subsidiary
230 West Passaic Street
Maywood, NJ 07607

RE: PROPOSAL FOR SERVICES

Dear Dr. Mehta:

In light of our recent discussions,  you have expressed an interest in retaining
our firm as internal accountants and financial and management consultants. It is
our mutual  understanding  that our services  will be an integral  part of Elite
Pharmaceuticals,  Inc. and Subsidiaries going forward and after its registration
of shares with the Securities and Exchange Commission.

Should  Elite  require the audit  services of our firm in the future,  after the
necessary  waiting  period  required by SEC  regulations  and the SECPS Practice
Section  of  the  AICPA,  we  will  relinquish  all  services  that  impair  our
independence and will refer all duties to Elite's designated financial officer.

If the foregoing  proposal is  acceptable,  we would  relinquish our position as
independent  auditors  for  Elite and we would no  longer  be  independent  with
respect  to Elite  under the Code of  Ethics,  as  promulgated  by the  American
Institute of  Certified  Public  Accountants,  and the  Securities  and Exchange
Practice Section.

The following  services will be rendered by Goldman & Gittelman,  P.C. on behalf
of Elite (this list is not intended to be all inclusive):

      o     Monthly compilation of Elite Labs and Elite Pharmaceuticals.

      o     Installation  of  computer  accounting  system in  conjunction  with
            outside computer hardware and software vendors.

      o     Training and  coordination  of bookkeeping  and/or  controller  when
            hired.

<PAGE>

Dr. Atul Mehta, CEO
Elite Pharmaceuticals, Inc. and Subsidiary
Page 2
January 26,1998


      o     Financial consulting including:

            1.    Cash investment management.

            2.    Review and negotiations of all lease agreements.

            3.    Negotiation  and  maintenance  of bank  financing  and  credit
                  facilities.

      o     Recommendation of independent  auditors,  subject to approval by the
            Company's  Board of Directors and its audit  committee and SEC Legal
            Counsel, and preparation of all schedules and information  necessary
            during the audit.

      o     Coordination  of audit  fieldwork  and review of  audited  financial
            statements  for final  approval  by the Board of  Directors  and its
            audit committee.

      o     Preparation  of 10K and 10Q reports to be filed with the  Securities
            and Exchange Commission,  in coordination with the Company's outside
            auditors and SEC Legal Counsel.

      o     Preparation of consolidated corporation tax returns and tax planning
            issues.

      o     Attendance at Board of Directors meetings as required.

      o     Any other services requested by the Company.

Rates  charged for the above  services  will be  discounted by 25% of our firm's
standard hourly rates. My current rate at January 1, 1998 will be $147 per hour.
The rate charged to Elite will be $110 per hour.  The average rate for my staff,
after  discount,  will be $75 per hour.  We agreed to maintain this rate through
December 31, 1998 and will discuss any rate increases at that time.

Initially,  we expect to budget 24 hours per month for the year  ended  December
31, 1998, or 288 hours annually. However, all hours will be billed as incurred.

<PAGE>

Dr. Atul Mehta, CEO
Elite Pharmaceuticals, Inc. and Subsidiary
Page 3
January 26, 1998

Based  on our  budget,  the  total  annual  fee is  projected  at  $28,800  plus
disbursements.  We are proposing a monthly  retainer fee of $2,400 to be set off
against actual hours incurred.  On a quarterly basis (April 1, July 1, October 1
and  January  1) we will  present  you with a  reconciliation  of  actual  hours
incurred,  including a detailed  analysis of these  services,  as reduced by the
monthly  retainer  fee.  Should the actual  hours  incurred  exceed the retainer
payments,  Elite will make  payment on this  excess,  based on the hourly  rates
specified above, within 30 days of invoice presentation.

On a quarterly  basis,  should the  retainer  payments  exceed the actual  hours
incurred,  Elite will receive a credit against the subsequent  monthly  retainer
payments  until  the  overpayment  is  fully  offset.   All   disbursements  and
out-of-pocket costs will be billed monthly along with the retainer fee.

This  proposal  has already been  reviewed by Elite's SEC legal  counsel and has
been approved by the Board of Directors.

We believe  the above  arrangement  will be  beneficial  to all parties and will
provide  Elite with the level of service it will require over the coming  years.
Goldman & Gittelman,  P.C. has enjoyed a fine  relationship with Elite since its
inception and we look forward to continuing our relationship  well into the next
millennium.

Very truly yours,

GOLDMAN & GITTELMAN, P.C.


/s/ Mark I. Gittelman

Mark I. Gittelman, CPA

MIG/vr

The above  constitutes  our contract  together which can be terminated by either
party subject to 30 days written notice. I have read it and understand its terms
and provisions.


Accepted by: /s/ Atul M. Mehta                                 January 29, 1998
             ------------------------------------------        ----------------
             Dr. Atul Mehta, President and CEO                       Date
             Elite Pharmaceuticals, Inc. and Subsidiary